Venezuelan Trade Declines with U.S., Increases with Brazil, Russia, China, Japan
By James Suggett
August 21, 2009 - Venezuelanalysis.com
Trade between Venezuela and the United States decreased by more than half in the first semester of this year. Meanwhile, Venezuela continued to diversify its trading partners in South America and abroad, most recently through a series of bilateral accords with Brazil, while Russia increased its investments in the Orinoco Oil Belt fivefold.
According to a recent report by the Venezuelan-American Chamber of Commerce and Industry (Venamcham), trade between the U.S. and Venezuela was valued at $25.7 billion in the first half of 2008, and declined by nearly 53% to just over $12 billion during the first half of 2009.
During April and June of this year, Venezuela's exports to the U.S. totaled $6.4 billion, which is nearly 56% less than its exports to the U.S. during April and June of last year, when exports were worth $14.5 billion, according to the report. Venezuela's imports from the U.S. totaled $2.3 billion in April and June of this year, a 22% decline in comparison to April and June of 2008, when imports were worth $3 billion.
Overall, the Venamcham report shows that Venezuela's oil sector accounted for 96% of exports to the U.S. in the first semester of this year, which is roughly the same as last year. Non-oil goods accounted for roughly 93% of Venezuela's imports from the U.S. in the first semester of this year.
Meanwhile, Venezuela continues to diversify its trade amongst countries in South America and abroad. In a meeting in Caracas on Friday, the foreign relations ministers, trade ministers and other officials from Brazil and Venezuela signed a series of bilateral accords to increase cooperation in food security and electricity generation, and to boost Venezuela's capacity to produce glass products, valve, PVC plastic products, industrial refrigeration, and electrical appliances.
Venezuelan Foreign Relations Minister Nicolás Maduro said the accords are not only aimed at boosting Venezuela's economy and bilateral relations with Brazil, but convey "the vision of the great South American Nation."
Colombia was Venezuela's biggest trading partner in South America last year, and its second largest trading partner overall, after the U.S.
However, since Colombia and the U.S. signed a deal in late July to allow the presence of thousands of U.S. military personnel on seven Colombian bases, Venezuela has vowed to replace its imports from Colombia with imports from the rest of South America.
Before going into Friday's meeting with Brazilian officials, Venezuelan Commerce Minister Eduardo Samán said Venezuela could replace as much as 60% of its imports from Colombia within six months through deals with Argentina, Brazil, and the member countries of the Caribbean and South American integration bloc known as ALBA.
Moreover, Russia, the biggest investor in Venezuela's Orinoco Oil Belt according to the Venezuelan newspaper Panorama, has pledged to invest a total of $30 billion so far this year in the exploitation of the giant reserve, which is estimated to be the world's second largest with 235 billion barrels of crude.
The deal with Russia was signed last week and includes the formation of a mixed enterprise between a consortium of Russian companies and Venezuela's state oil company, PDVSA. It boosted Russia's total investment in the Orinoco to five times greater than it was at the start of the year.
Russia's investment follows an $8 billion investment by Japan and a $6 billion investment by China in the Orinoco, deals which were signed during Venezuelan President Hugo Chavez's tour of the region last April. On that occasion, Chavez made clear his government's intention to diversify its trading partners.
"Japan is interested in diversifying its supplies from energy providing countries, and Venezuela complements this with its desire to broaden the destinations of its oil exports... the United States is no longer the only country interested in our oil," said President Chavez.
Venezuela's Central Bank (BCV) reported this week that the GDP decreased by nearly two and a half percent in the second quarter of this year, compared to the second quarter of last year. This marks an overall contraction of 1% in the Venezuelan economy when including the first quarter of this year.
Oil-related activity declined by 1.6%, while non-oil related activity declined by 4.2%, the BCV reported. The sharpest declines were registered in the chemical, metallurgy, mining, and plastics industries, while growth was registered in the construction and electricity industries, meat, grains, and vegetable production, and services sector.
Bearing the effects of the world economic downturn that was sparked by the U.S. financial crisis last year, Venezuela's economic growth shrank to 0.5% in the first quarter of this year, following more than twenty-two consecutive quarters of economic growth.